“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”Warren Buffet
Invesco bought a 11% stake in Zee in August 2019 at Rs 400 – spending ~Rs4000cr apparently after the promoter’s debt problems were known and, in a bid, to help them. It intends to Sell 7.8% in a block deal around Rs 270-290. Invesco lost 30% odd in investment over 2.5 years – when the market was up 30%.
Invesco wants Buyers to believe that the “Sony deal in its current form has a great potential for current shareholders “. The purpose of the sale is to only align its exposure in line with the investment team’s portfolio construction approach. I am not sure what was the construction approach when they bought 11% stake in August 2019 when they already had 7%+ stake.
Invesco in the last 2.5 years – has cried foul, tried to replace MD / promoter family, approached courts, criticized the Sony deal. So, what has changed? Well a seller has no choice but to appreciate the goods that he is selling.
Timeline of Zee – Invesco love story:
BUY – August 2019 – Invesco Oppenheimer buys 11 % stake in Zee @ Rs 400 to help promoters pay debt. (Stock jumps)
FIGHT – Sept -2021– Invesco releases open letter Calling for EGM and change in board and MD Puneet Goenka. (Stock jumps)
CRY – Sept 2021– Zee announces deal with Sony. Invesco says promoters to benefit from the deal. (Stock jumps)
Retaliation – Oct -2021 -ZEE claims Invesco was a front for another company. Hinting at an Oil and gas Behemoth turned telco.
CRY foul – Nov 2021– Invesco approaches the court against Zee and then later High court says – EGM has to be called.
Gives up and starts praising – Mar -2022 -Invesco gives up a call to remove ZEE leadership. Starts to say the Sony deal is Good.
Partial Dump ZEE- April 2022 – Invesco to sell about 7.8% stake in ZEE around Rs 270-290 (Bought at 400) despite believing Sony deal is good for the company.
Can we learn?
While we don’t know what Invesco learned from this experience with ZEE. The bigger question is whether the investors buying the stake offered – have learned anything?
- Can you trust the company again?
- Can you expect ZEEL to work for minority shareholders? The Sony deal was pretty sweet for promoters only.
- How clean are the books and how clean will they be?
I had written a series of blogs earlier – raising reasonable doubt in the past. Will recommend rereading – so that you know what you are getting into.